1、Negotiating I&E BusinessModule Two Import&Export Business of CommoditiesObjectivesAfter learning this module,you should:1.know what you should prepare before I&E business negotiations;2.know the forms and be familiar with the procedures of negotiating I&E business;3.be familiar with what to be discu
2、ssed in I&E business negotiations;4.know the forms of I&E contracts;5.know the main contents of I&E contracts;6.be able to explain the requirements on legally effective contracts;ObjectivesObjectives 7.be able to make inquiries properly;8.be able to explain the elements of an effective offer;9.be ab
3、le to state the validity of an offer properly;10.be able to judge the effectiveness of an offer;11.be able to make an effective offer for your goods;12.be able to explain the conditions of the withdrawal,revocation,and termination of an offer;13.be able to explain the functions of a counter-offer;14
4、.be able to make counter offers properly;15.be able to explain the legal effect of acceptance;ObjectivesObjectives16.be able to explain the elements of an effective acceptance;17.be able to explain conditional acceptance and material alteration;18.be able to explain late acceptance and relative stip
5、ulations;19.be able to judge the effectiveness of an acceptance;20.be able to make acceptance properly;21.be able to confirm acceptance properly.ObjectivesFocus and Difficult Points1.the elements of an effective offer2.the ways of stating the validity of an offer3.the withdrawal and revocation of an
6、 offer4.the elements of an effective acceptance5.conditional acceptance and material alteration6.late acceptanceFocus and Difficult PointsContents Part OneBasic Knowledge Part TwoPractical Training Part ThreeTasksPart One Basic KnowledgeCONSection A Business Negotiation Section B I&E Contract A.1 Pr
7、eparations before I&E Business Negotiation Before negotiation takes place,both the parties shouldmake some preparations.The following are some preparations the exporter should make carefully:market investigations First of all,the exporter is to investigate the internationalmarket of the goods for ex
8、port Then the exporter is to investigate the market situation of his target country.Further,the exporter is to make some investigations about the importer he is to deal with.SECCONA.3A.21 marketing plan The exporter should make a full detailed marketing planor negotiating plan for the negotiations.T
9、he plan should include the following main contents:a.the target market;b.the target customers;c.the estimated demand of the customers;d.the quantity available to supply;e.the target profit level of the transaction;f.the price to offer for the goods.the main costs and domestic charges;A.1 Preparation
10、s before I&E Business NegotiationcfbdaeCONSEC2A.3A.2g the desired payment terms;etc.advertising and publicity The exporter usually hopes to have as many business contact as possible.So before business negotiation,he may do some preparations to popularize his company and the goods he is handling.sele
11、cting and training negotiators The negotiators should know well the international market situation,the product and its production,the foreigntrade policies of the government,and others involved in the I&E business.A.1 Preparations before I&E Business NegotiationCONSECh34A.3A.2They should have good u
12、nderstanding of international laws,common practices,and political and cultural influences.They should also have good communication skills and foreign language abilities.For the business negotiation of complicated and large projects,specialists from the fields of business,technology,finance,law,etc.s
13、hould be selected as the negotiators.Training negotiators is necessary for most of the exporters as it is unlikely that every negotiator is competent of the role he is to take in the negotiation.Role-playing is a valuable technique for training negotiators.A.1 Preparations before I&E Business Negoti
14、ationCONA.3A.2SECA.2 Forms and Procedures of I&E Business Negotiation I&E business negotiations can be done verbally bytelephone communications or by face-to-face talks,However,most of the I&E business negotiations are carried on by written forms such as the exchange of letters,cables,faxes,e-mails,
15、etc.Business negotiation usually involves four stages:inquiry,offer,counter-offer,and acceptance.Among these four stages,offer and acceptance are the two necessary ones which are required for concluding the transaction between the importer and the exporter.CONA.1A.3SEC An inquiry is a request for in
16、formation on concluding atransaction.An inquiry can be made by either of the importer or the exporter and may be in the form of written correspondence,such as a letter,telegram,telex,fax,e-mail or verbally by talk in person.An inquiry has no binding force on the maker.A.2 Forms and Procedures of I&E
17、 Business Negotiation A.2.1 InquiryCONSECA.1A.3 An offer is made by the exporter or importer,promising to sell or buy goods on the terms and conditions stated.When the offer is made by the importer,it is often called a“bid”.An offer can be made both verbally or by written forms,and may be a response
18、 made in reply to an inquiry or may be made voluntarily with a view to expanding business.An offer has binding force upon the offeror.It creates a power of acceptance permitting the offeree,by accepting the offer,to transform the offerors promise into a contractual obligation.A.2 Forms and Procedure
19、s of I&E Business Negotiation A.2.2 OfferCONSECA.1A.3 The rejection or partial rejection of the offeree to the offer is called counter-offer.A counter-offer is virtually a new offer initiated by the offeree of the original offer.Once the counter-offer is made,the original offer is no longer valid.Th
20、e original offeree now becomes the offeror and the original offeror becomes the offeree as the counter-offer becomes the new offer.Counter-offer constitutes the main part of business negotiations.It is usually time consuming and may go many rounds before business is concluded or dropped.A.2 Forms an
21、d Procedures of I&E Business Negotiation A.2.3 Counter-offerCONSECA.1A.3 An acceptance is complete assent to the terms and conditions stated in an offer or counter-offer as a new offer.An acceptance becomes effective when it has reached the offeror and an effective acceptance means the formation of
22、the contractual relationship of the importer and exporter.So an acceptance can not be revoked and can be withdrawn only if the withdrawal reaches the offeror before or at the same time as the acceptance.A.2 Forms and Procedures of I&E Business Negotiation A.2.4 AcceptanceCONSECA.1A.3 The trade terms
23、 negotiated are chiefly of the following:the subject matter of the business,including the name,quality,quantity,and packing of the goods;the price of the goods;the liability of the exporter and importer,including:the time,place,and method of delivery of the goods b.the varieties and numbers of the r
24、equired documents c.the time,place,and method of payment d.the arrangement of shipment e.the insurance of the shipmentA.3 Trade Terms Negotiated in I&E BusinessCONA.1A.2123SECcbdae the export customs clearance and other export formalities;the import customs clearance and other import formalities.the
25、 methods to prevent and settle disputes,including commodity inspection,complaints and claims,force majeure,and arbitration,etc.A.3 Trade Terms Negotiated in I&E BusinessCON4SECA.1A.2fgPart One Basic KnowledgeCONSection A Business Negotiation Section B I&E Contract B.1 The Forms of I&E Contract In in
26、ternational trade,a contract can be in oral,writtenor other forms.It is stated in the Convention that awritten contract endorsed by both parties of a deal is nota required condition for the formation of a contract.However,when signing this multilateral treaty,Chinese government took a reservation co
27、ncerning the forms of contract.It means,in Chinese I&E business,a contract must be in written form.SECCONB.3B.2B.4 The most often used forms of written contract in China are entitled“contract”or“confirmation”.When the contract is produced by the importer,it may be entitled“purchase contract”or“purch
28、ase confirmation”while it is produced by the exporter,it may be entitled“sales contract”or“sales confirmation”and both shortened as“S/C”.A contract lists in detail all the terms of a deal.A confirmation is a contract in a simplified form and usually does not include some general terms.A contract and
29、 a confirmation are of the same legal effectiveness.B.1 The Forms of I&E ContractCONSECB.3B.2B.4 1)A written contract endorsed by both parties of the deal constitutes the evidence of the formation of a contract.2)A written contract is the necessary condition for the formation of a contract in the fo
30、llowing cases.3)A written contract is the foundation for the importer and exporter to perform their contractual obligations.B.2 The Importance of Signing a Written ContractSECCONB.1B.3B.4123 An I&E contract usually comprises three parts:the opening,the body,and the close.1)the opening of the contrac
31、t 2)the body of the contract The body is the main part of the contract.It usually includes the clauses indicating the following terms and conditions of the transaction:a.the name of the goods;b.the quality of the goods;c.the quantity of the goods;d.the packing of the goods;B.3 Main Contents of an I&
32、E ContractCONB.1B.2B.41SEC2e.the unit price and total amount of the goods;f.the shipment of the goods,including the port of shipment,the port of destination,the time of shipment,the shipping marks,etc.;g.the insurance on the transportation of the goods;h.the payment terms;i.the inspection of the goo
33、ds;j.the disputes and claims;k.the force majeure;l.the arbitration of disputes;m.other conditions.B.3 Main Contents of an I&E ContractCONSECB.1B.2B.4 3)the close of the contract 【Example 2-1】A Sales ContractB.3 Main Contents of an I&E ContractCON3SECB.1B.2B.4Sales ContractNo:Date:Party A:Party B:Add
34、ress:Address:This contract is made by and between Party A and Party B.Whereby Party A agrees to sell and Party B agrees to buy the under mentioned goods according to the terms and conditions stipulated below and overleaf:B.3 Main Contents of an I&E Contract (1)Names of commodity(ies)and specificatio
35、n(s):(2)Quantity:(3)Unit price:(4)Amount TOTAL:_,with _%more or less allowed.(5)Packing:(6)Port of Loading:(7)Port of Destination:(8)Shipping Marks:CONSECB.1B.2B.4 (9)Time of Shipment:Within _ days after receipt of L/C,allowing transshipment and partial shipment.(10)Terms of Payment:By 100%Confirmed
36、,Irrevocable and Sight Letter of Credit to remain valid for negotiation in China until the 15th day after shipment.(11)Insurance:To be effected by Party B covering All Risks and War Risk only as per the Clauses of the Peoples Insurance Company of China for 110%of the invoice value.B.3 Main Contents
37、of an I&E ContractCONSECB.1B.2B.4 (12)Party B shall establish the covering Letter of Credit before _,failing which,Party A reserves the right to rescind this Sales Contract without further notice,or to accept whole or any part of this Sales Contract,non-fulfilled by the Buyer,or to lodge claim for d
38、irect losses sustained,if any.(13)Documents:Party A shall present to the negotiating bank,Clean On Board Bill of Lading,Invoice,Quality Certificate issued by the China Commodity Inspection Bureau or the Manufacturers,B.3 Main Contents of an I&E ContractCONSECB.1B.2B.4Survey Report on Quantity/Weight
39、 issued by the China Commodity Inspection Bureau,and Transferable Insurance policy or Insurance Certificate when this contract is made on CIF basis.(14)For this contract signed on CIF basis,the premium should be 110%of invoice value.All risks insured should be included within this contract.If Party
40、B asks to increase the insurance premium or scope of risks,he should get the permission of Party A before time of loading,and all the charges thus incurred should be borne by Party B.B.3 Main Contents of an I&E ContractCONSECB.1B.2B.4 (15)Quality/Quantity Discrepancy;In case of quality discrepancy,c
41、laim should be filed by Party B within 30 days after the arrival of the goods at port of destination;while for quantity discrepancy,claim should be filed by Party B within 15 days after the arrival of the goods at port of destination.It is understood that Party A shall not be liable for any discrepa
42、ncy of the goods shipped due to causes for which the Insurance Company,Shipping Company,other transportation organizations and/or Post Office are liable.B.3 Main Contents of an I&E ContractCONSECB.1B.2B.4 (16)Party A shall not be held liable for failure or delay in delivery of the entire lot or a po
43、rtion of the goods under this Sales Contract in consequence of any Force Majeure incidents.(17)Arbitration:All disputes in connection with this contract or the execution thereof shall be settled friendly through negotiations.In case no settlement can be reached,the case may then be submitted for arb
44、itration to China International Economic and Trade Arbitration Commission in accordance with the provisional Rules of Procedures promulgated by the said Arbitration Commission.B.3 Main Contents of an I&E ContractCONSECB.1B.2B.4The arbitration shall take place in Beijing and the decision of the Arbit
45、ration Commission shall be final and binding upon both parties;neither party shall seek recourse to a law court or other authorities to appeal for revision of the decision.Arbitration fee shall be borne by the losing party.Or arbitration may be settled in the third country mutually agreed upon by bo
46、th parties.(18)Party B is requested always to quote THE NUMBER OF THE SALES CONTRACT in the Letter of Credit to be opened in favour of Party A.B.3 Main Contents of an I&E ContractCONSECB.1B.2B.4B.3 Main Contents of an I&E Contract (19)Other Conditions:Party A:Party B:Signature:Signature:CONSECB.1B.2
47、B.4 The parties should have the civil capacity of conduct.In I&E practice,one party of the contract may be a naturalperson or a legal person.2)The subject matter and contents of the contract should be legal.3)The parties should enjoy equal legal standing and neither party may impose its will on the
48、other party.4)The form of the contract should be in compliance with the stipulations of relative laws or conventions.5)The contract should have a legal“consideration”or“cause”.B.4 The Requirements on the Legally Effective ContractCONB.1B.3B.21SEC2345Part Two Practical TrainingCONTraining One Making
49、Inquiries and Reply to Inquiries Training Two Making OffersTraining Three Making Counter-offers Training Four Accepting Offers or Confirming Acceptance An inquiry from a regular importer may be very simple In content,in which only the name and/or specifications Of the commodity will be mentioned.An
50、inquiry from a new customer may include great details such as the name of the commodity,quality,specifications,quantity,terms of price,terms of payment,time of shipment,packing method,etc.so as to enable the exporter to make a proper offer.Inquiries can be classified into two kinds:general inquiries
